U.S. Carmakers Are Riding High, But Detroit May Not Feel It

Jeff Caldwell, a chassis assembly line supervisor, checks a vehicle on the assembly line at the Chrysler Jefferson North Assembly plant in Detroit on May 8.

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Originally published on July 25, 2013 6:19 pm

The news out of Detroit has been grim of late, but there are some bright spots coming from one corner of the Motor City. On Thursday, General Motors posted its 14th straight profitable quarter since emerging from bankruptcy. Ford announced its 16th consecutive profitable quarter Wednesday, and Chrysler is expected to offer good news soon as well.

But while this should be good news in a city that has just filed for bankruptcy, what's good for Detroit's automakers isn't always good for Detroit.

None of the car companies would agree to talk about Detroit's bankruptcy on tape for this story. But when you consider the Big Three — and the auto industry as a whole — there's one fact to recognize, says Michael Robinet, an analyst with IHS Automotive. "The epicenter for the U.S. automotive industry, from a vehicle production perspective, is probably northern Kentucky," he says.

Robinet says cars and Detroit are inextricably linked emotionally and culturally, but not so much financially anymore.

"All the major decisions within the global automotive industry somehow weave their way through Detroit," he says. "So this is still the heart of the industry. A lot of the muscle around it has sort of moved to other parts of the country."

The home of General Motors sits in downtown Detroit, but GM is the only auto company actually headquartered inside the city limits. The company has about 30,000 employees in the Detroit area, but just a little more than 4,000 of them work inside the city itself.

Ford, in contrast, has its headquarters in Dearborn, Mich., and its plants in the region are outside the city limits. Chrysler is headquartered in Auburn Hills, north of the city.

Back in Detroit, Michelle Krebs, an auto analyst for Edmunds.com, drives this reporter past a Chrysler plant where the Jeep Grand Cherokee is manufactured. "It's building a lot of vehicles right now," Krebs says. "They're fully employed and then some."

This plant is special, Krebs says, because it's the only significant plant left in the city of Detroit. There are two others, but one of them manufactures the Dodge Viper, which is not a high-volume-selling car. The second makes the Chevy Volt, but only one-half of that facility lies inside the city limits.

Krebs says what helped make the Detroit carmakers healthy is that they got leaner and shed much of their legacy costs for retiree benefits. If the auto industry can't come to the rescue of the city, she says, maybe it can serve as an example.

"First of all, we didn't know if [the carmakers] would exist and we didn't think they'd make it through a bankruptcy process. And now they're flourishing like crazy," Krebs says. "We're seeing that same bleak picture for Detroit. So I think there is some hope that [since] we got through the GM-Chrysler bankruptcy, maybe we can get through the Detroit bankruptcy."

People who are interested in the auto business and Detroit say cars are absolutely vital to the health of the city — but they just aren't enough anymore.

Copyright 2013 NPR. To see more, visit http://www.npr.org/.

Transcript

ROBERT SIEGEL, HOST:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel. And this hour begins with something that we have not reported much of recently, good news from Detroit. Today, General Motors posted its 14th straight profitable quarter since emerging from bankruptcy and, for the first time in more than 20 years, a domestic sedan, the Chevy Impala, won top marks from Consumer Reports.

Yesterday, Ford posted its 16th straight profitable quarter and Chrysler is expected to report strong earnings, too. Of course, this all comes in the midst of Detroit's bankruptcy. NPR's Sonari Glinton covers the auto industry and as he reports, what's good for the car makers isn't always good for the city.

SONARI GLINTON, BYLINE: In order to tell the story of Detroit, the city, and its relationship to the auto industry, I've come to the corner of Randolph and Jefferson in downtown Detroit. Now, on the corner that I'm standing on is the Coleman A. Young Municipal Center, essentially city hall, and across the street is the Renaissance Center and that is the home of General Motors.

Now here is an important thing. General Motors is the only car company headquartered inside the city limits of Detroit. Now, for the rest of the tour, I'm going to meet up with Michelle Krebs, who's an auto analyst with Edmonds.com.

MICHELLE KREBS: How are you, kiddo?

GLINTON: I'm all right. How are you?

KREBS: Good. Okay. So we're going to east Jefferson, right?

GLINTON: Yes.

KREBS: Okay. In my import.

GLINTON: Ironically enough, Krebs picked me up in a Toyota SUV she was test-driving that's manufactured in Indiana, which is kind of part of the story. While Michelle Krebs and I drive to our next stop, let's take care of some business. None of the car companies would agree to talk about Detroit's bankruptcy on tape. And when you think of those car companies and the total industry, there's one fact to recognize.

MICHAEL ROBINET: The epicenter for the U.S. automotive industry from a vehicle production perspective is probably northern Kentucky.

GLINTON: That's Michael Robinet. He's an analyst with IHS Automotive. He says cars and Detroit are inextricably linked emotionally and culturally, but not so much financially anymore.

ROBINET: All the major decisions within the global automotive industry somehow weed their way through Detroit. So this is still the heart of the industry. A lot of the muscle around it has sort of moved to other parts of the country.

GLINTON: Robinet and I were talking across the street from a Ford transmission plant. Ford is headquartered in Dearborn, Michigan and its plants that are in the region are outside the city limits. Chrysler is headquartered in Auburn Hills, north of the city. And to give you an idea, GM has about 30,000 employees in the Detroit area, a little over 4,000 of them work inside the city itself.

Okay. Back to my tour with Michelle Krebs. Tell me where we're at.

KREBS: We are at the Jefferson Avenue plant that's owned by Chrysler, where the Jeep Grand Cherokee is built and it's building a lot of vehicles right now. They're fully employed and then some.

GLINTON: So what makes this plant special?

KREBS: This plant is special because it's really the only plant that's left in the city of Detroit.

GLINTON: There are two other plants. One manufactures the Dodge Viper, which is not a volume-selling car, and the other makes the Chevy Volt. That plant is half inside the city limits. Krebs says what helps to make the Detroit car makers healthy is that they got leaner and shed much of their legacy costs for retiree benefits.

She says that if the auto industry can't come to the rescue of the city, maybe it can serve as an example.

KREBS: First of all, we didn't know if they would exist and we didn't think they'd make it through a bankruptcy process. And now, they're flourishing like crazy. We're seeing that same bleak picture for Detroit, so I think there is some hope that we got through the GM/Chrysler bankruptcies, maybe we can get through the Detroit bankruptcy.

GLINTON: People who are interested in the auto business and Detroit say cars are absolutely vital to the health of the city, but they aren't enough, not anymore. Sonari Glinton, NPR News, Detroit. Transcript provided by NPR, Copyright NPR.